When Mexico suffered from capital flight in 1994, Mexico's net capital outflow
A)and net exports decreased.
B)and net exports increased.
C)increased while net exports decreased.
D)decreased while net exports increased.

Question

Quizplus · Accepted Answer

When a country experiences capital flight, investors withdraw their capital, leading to a depreciation of the domestic currency. This depreciation makes the country's exports cheaper and imports more expensive, thereby increasing net exports.

When Mexico Suffered from Capital Flight in 1994, Mexico's Net